https://en.sputniknews.africa/20241227/is-africas-debt-reaching-breaking-point-1069920465.html
Is Africa's Debt Reaching Breaking Point?
Is Africa's Debt Reaching Breaking Point?
Sputnik Africa
Africa's debt servicing costs have skyrocketed by 500%, with private creditors now holding nearly 50% of the continent's debt. In 2024, Africa's debt reached... 27.12.2024, Sputnik Africa
2024-12-27T17:38+0100
2024-12-27T17:38+0100
2024-12-27T17:38+0100
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Is Africa's Debt Reaching Breaking Point?
Sputnik Africa
Africa's debt servicing costs have skyrocketed by 500%, with private creditors now holding nearly 50% of the continent's debt. In 2024, Africa's debt reached about $74 billion, threatening long-term stability. The African Development Bank proposes reforms, but finding sustainable solutions remains a pressing issue.
Multiple reasons are fueling the uptick in Africa's borrowing costs, including a shift towards private creditors and international capital markets, which typically charge higher interest rates than multilateral development banks. Additionally, global interest rate hikes, poor credit ratings, and a decline in concessional financing from traditional sources have all led to tighter financing conditions and increased borrowing costs for African nations, Professor Joshua Yindenaba Abor, Financial Economist and Professor of Finance at the University of Ghana Business School, told African Currents in an interview.To find out what else our guest had to say, tune in to the African Currents podcast, brought to you by Sputnik Africa.In addition to the website, you can also catch our episodes on Telegram.► You can also listen to our podcast on Apple Podcasts, Spotify, Deezer, Pocket Casts, Afripods, Podcast Addict.► Check out all the episodes of African Currents.
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Is Africa's Debt Reaching Breaking Point?
Africa's debt servicing costs have skyrocketed by 500%, with private creditors now holding nearly 50% of the continent's debt. In 2024, Africa's debt reached about $74 billion, threatening long-term stability. The African Development Bank proposes reforms, but finding sustainable solutions remains a pressing issue.
Multiple reasons are fueling the uptick in Africa's borrowing costs, including a shift towards private creditors and international capital markets, which typically charge higher interest rates than multilateral development banks. Additionally, global interest rate hikes, poor credit ratings, and a decline in concessional financing from traditional sources have all led to tighter financing conditions and increased borrowing costs for African nations, Professor Joshua Yindenaba Abor, Financial Economist and Professor of Finance at the University of Ghana Business School, told African Currents in an interview.
"The point is that the increase in borrowing costs may be attributable to several factors, and these may be stemming from changes in global financial markets. The first is the shift in debt composition, and we can mention that over the past decades, African countries, if you like, have increasingly turned to private creditors and international capital markets for financing. We can also talk about global interest rate hikes [...]. We can also talk about credit rating challenges. With a notice that many African countries experience very unfavorable credit ratings and which often elevates the perceived risk [for] investors [...]. Another important point is that a decline in concessional financing and we see that gradually, and there has been a reduction in concessional financing from traditional, multilateral, and bilateral sources," Professor Abor states.
To find out what else our guest had to say, tune in to the African Currents podcast, brought to you by Sputnik Africa.
In addition to the website, you can also catch our episodes on
Telegram.► Check out all the episodes of African Currents. 
